Nathan from Alabama recently called in to The Ramsey Show, in a financial pickle and seeking some advice.
While he’s going through a “nasty divorce,” his current vehicle has died. “She split up everything and left me with almost nothing,” he said.
He told Dave Ramsey and cohost Rachel Cruze that he doesn’t want to get a car loan. But with just $2,000 in his account, he doesn’t know what other options he has, especially because his soon-to-be ex-wife removed his access to their joint savings of approximately $50,000.
After learning that Nathan has been separated for almost five months, Ramsey encourages him to take action, now.
“She’s basically telling me to get a car loan,” Nathan said. “Which I don’t like doing because we finally got out of debt.”
He sought Ramsey’s guidance on how to get a vehicle without taking on debt, even during this difficult time in his life.
Currently, Nathan has around $2,000 in savings. In part, he says his savings are low due to his ongoing lawyer fees, which is hardly surprising. According to LegalZoom, the a divorce can cost more than $11,000, on average, when using an experienced family law attorney. However, before their split, Nathan estimates that he and his ex had a combined $50,000 in cash savings available.
With his ex pregnant with another man’s child, Ramsey fears that Nathan’s emotions are clouding the situation.
“First thing you do is you call your lawyer and you say, ‘I need half of our savings account transferred to me by the end of the day. This is asinine. I want my money now,’” he advised.
Ramsey encouraged Nathan to be more forceful in his demands for the divorce to move forward swiftly and equitably.
“You’ve been real sweet and standing back and trying to let the lawyers do it,” he said, “The lawyers aren’t doing their job.”
With things at a standstill, Ramsey told Nathan to “light a fire under these people,” starting with his lawyer.
“You’ve been pushed around and you’re about to push back,” he said.
Other than pushing back, Ramsey says Nathan’s only other option is to sell his current vehicle and use his savings to upgrade to a $3,000 vehicle.
Beyond the issue of transportation, Ramsey told Nathan to treat the divorce as a dissolved business partnership.
“When a divorce occurs, it turns a marriage into a business transaction,” he said.
Both Ramsey and Cruze advised Nathan to “wrap it up,” and finalize the divorce as efficiently, smoothly — and quickly — as possible.
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When going through a divorce, it’s critical that you manage your money proactively. This includes moving quickly to separate your finances from those of your soon-to-be former spouse, as much as possible.
One step you can take immediately is to open a new checking account and direct your paycheck into that new account. You should also consider freezing existing joint credit products to prevent your spouse from borrowing additional funds under both of your names.
Also ensure that your individual finances are in order. This may require you to make some lifestyle adjustments to suit your newly single income. According to Central Bank, individuals who have been divorced must increase their income by more than 30% to maintain their predivorce standard of living.
For example, you might downsize to a smaller home or apartment, or downgrade to a more affordable vehicle to reduce your spending. Then, as you build space into your budget, use the extra money to build up an emergency fund and pay down high-interest debt.
Throughout the divorce proceedings, working with an experienced family law attorney can help you effectively negotiate the necessary division of assets.
Take the time to think through what matters most to you and how you can negotiate so that each party walks away with their fair share. For example, you might be able to keep your individual retirement accounts untouched but divide any cash savings proportionally.
In addition to working with a legal professional, a qualified financial advisor can assist you in rebuilding a financial plan that aligns with your new life goals — and help you make money decisions to support those aspirations.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
